- Market pricing for both start of rate cuts and totality of cuts in 2024 is excessive
- Recent accommodation priced into rates is inconsistent with policy stance to get inflation back to target
- Inflation will rebound in 1H 2024 and ECB should only reassess policy outlook after this period
- Wage formation in Q1 2024 will be crucial for policy outlook
This continues from the pushback since last week but the market is having none of it. The current pricing still shows ~57% probability of a rate cut in March with 38 bps of rate cuts priced in for April. As a whole for next year, there is 154 bps worth of rate cuts priced in at the moment.
This article was written by Justin Low at www.forexlive.com. Source